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The Question at the Heart of the Democratic Schism

Should the burden of proof be on reformers—or on vested interests?

Throughout the summer and fall, a group of writers (including me) began documenting the growing appeal of economic populism and the rising influence of its practitioners. We populist-boosters mostly had the field to ourselves for several months. But in the last few weeks, the skeptics have gotten vocal, culminating with a Wall Street Journal op-ed two weeks ago by the centrist group Third Way. The Third Way piece decried “the economic populism of New York Mayor-elect Bill de Blasio and Massachusetts Sen. Elizabeth Warren,” which it labeled a “dead end for Democrats.”

Lost in the back and forth has been a precise definition of what populism actually is. In some tellings it’s a rhetorical posture—say, denouncing inequality or Wall Street banks. In others, it refers to specific policy ideas, like raising the minimum wage or boosting Social Security benefits. Sometimes it’s been nothing more than a thinly-veiled cultural attack—a contempt for people who live on the Upper East Side and rent summer houses in Long Island.

Whatever the case, this vagueness does no favors for anyone trying to advance genuinely populist ideas. The lack of precision lets critics define populism in ways that are most convenient—coopting certain elements and distorting or trivializing others until the term gets drained of meaning. At that point, you no longer have a clash of worldviews, just what Slate’s Dave Weigel recently called a “game” between rival political mau-mau-ers.

Weigel’s piece on the flare-up between Third Way and the party’s populist wing was a useful case study in the dangers of defining our terms too loosely. Several times in the piece Weigel quotes Third Way’s co-founder and communications chief, Matt Bennett, who suggests everyone has gotten hung up over a mangy little label (never mind that his group wielded it like an epithet). If you set aide the loaded lingo, Bennett insists, we Democrats are mostly on the same side, with the exception of a few policy quibbles. “The idea of the op-ed was … [d]o we grapple with the entitlement crisis or not?” Bennett said. “[W]e’ve taken very progressive views on financial reform. We’ve featured lectures by people like Paul Volcker and Sheila Bair who are not, shall we say, running dogs for the banks.” Hey, some of my best friends are populists!

These characterizations are highly misleading. Populism can’t be ghettoized in a single issue like entitlements or financial reform. It touches pretty much every economic issue that divides Democrats. 

What I mean—and what I think most liberals today mean—by the term “populist” is rather literal: a politician or interest group whose power derives primarily from their appeal to lots of ordinary (read: non-wealthy, not especially connected) individuals rather than a handful of powerful (usually corporate) patrons, or the interest groups that represent them. The current incarnation of populism isn’t a matter of ideology per se, though it has obvious ideological implications. It’s about the extent to which a politician or group courts (or at least imagines herself to be courting) outsiders rather than insiders.

Some of the confusion around the meaning of populism arises because the current iteration combines two strains that have periodically been in tension with one another: a kind of people-who-make-things producerism (which is what the term “populist” has historically denoted) and an upper-middle-class reformism (historically associated with the term “progressive”). But the two strains have merged over the past few decades as a tiny overclass—the 1 percent—has pulled away from the rest of us.*

These days, senators like Tom Harkin of Iowa, Sherrod Brown of Ohio, and Jeff Merkley of Oregon all fit the populist profile to varying degrees. But no one comes closer to epitomizing contemporary center-left populism than Warren, whose power derives largely from the gob-stopping amounts of cash she’s able to raise from small donors, and from the millions of voters she’s able to reach through her online video and media presence. Warren is uniquely attuned to virtues of grassroots politics thanks to her days agitating for the creation of the Consumer Financial Protection Bureau. “She actively, personally coordinated with a grassroots coalition represented millions of people and brought pressure to bear on Congress as she was in the room negotiating,” says Adam Green of the Progressive Change Campaign Committee.

Why is this so fundamental? On any given issue, the Democratic insider and the liberal populist may see eye to eye. There are plenty of elites with their hearts in the right place—financiers who fund anti-climate change campaigns and corporate chieftains who tackle urban poverty. Other times the elites do the right thing for more cynical reasons—as when a handful of megabanks supported tougher rules governing mortgages because it would knee-cap less regulated competitors.

But when you actually try to reform the status quo, any approach that relies on courting insiders (lobbyists and businessman, often regulators and Washington think tankers) rather than ginning up public support typically stalls out before long. The oil-state Democrats cave to energy companies; northeastern Democrats cave to the financial industry; coastal Dems cave to the tech sector; farm-state Dems cave to Big Ag. There are defense-contractor Dems; big-box retailer Dems; health insurer Dems (one reason for the Rube-Goldberg contraption we know as Obamacare). And any number of them who will parrot the Beltway editorial page consensus about the urgency of hacking away at Medicare and Social Security, a view just about every respectable corporate executive and financier subscribes to.

When I was working on my recent profile of Warren, I often heard critics accuse her of being irresponsible—or worse, a demagogue. “For someone like me, it’s kind of a disappointing thing, in the sense that a Harvard law professor would presumably know the system and would understand the issues and would therefore address them in a responsible way,” one bank executive told me. “She’s gone out of her way to undermine confidence by using intellectual constructs that are nonsensical.”

The problem with this critique is that the only reliable way to make reformist inroads is to play to the folks back home. Take financial regulation, since we’re on the subject. In early 2009, Senator Maria Cantwell blocked the nomination of a former Goldman Sachs partner and Clinton Treasury official named Gary Gensler, whom she accused of being a Wall Street lackey, until the Obama administration got tougher on derivatives. It did. In August of that year, Gensler turned around and broke all sorts of unwritten rules by publicly slamming the too-soft derivatives bill Treasury Secretary Tim Geithner sent to Congress. It ended up tougher. In the spring of 2010, Senator Blanche Lincoln, a pro-business moderate who suddenly found herself in a brutal primary fight, abruptly embraced an even more austere set of derivatives restrictions. The final version of the law ended up tougher still.

All of these moves could on some level be chalked up to crass, ambitious, politically-motivated grandstanding. None of them would fit the banking industry’s definition of responsible discourse. But it’s also the case that no meaningful reform of the financial system would have happened without them. In the real world, the playing field is so tilted toward corporations that a decision to debate calmly, behind closed doors, is in effect a decision to accept the status quo.

More importantly, all these changes were both substantively important and politically popular. That’s why it’s so strange to hear people say populism would be an electoral catastrophe—“nothing would be more disastrous for Democrats,” the Third Way brass writes. The statement is almost self-refuting, suggesting that issues for which there’s a lot of public support are politically toxic. And, in fact, when you look at the set of issues the Third Way op-ed cites as a dead-end for Democrats—increasing Social Security benefits to keep up with inflation for seniors, resisting Medicare benefit cuts—they poll exceptionally well. The same goes for getting tough with Wall Street and for raising the minimum wage, among other populist positions.

That’s not to endorse majoritarianism, or some even cruder form mob rule. As Barney Frank once said, the voters are no bargain either. Granting full civil rights to gays, women, and racial minorities was the right thing to do even when most people opposed it. So was preventing AIG and Citigroup from collapsing in 2008 (though I would have done it on vastly different terms), even though no one wanted any part of it. The point is just that, when powerful economic interests are involved, the burden of proof should fall on self-interested elites rather than popular opinion, whereas Third Way proposes something akin to the opposite. That’s not a trivial difference. It’s the schism that’s increasingly defining the Democratic Party.

 *It’s worth pointing out, as my colleague John Judis noted in this piece, that populism has long resonated among a segment of the middle class.

Noam Scheiber is a senior editor at The New Republic. Follow @noamscheiber